China markets rally on oil price and reports of measures to audit bank lending
China markets rallied as local press reported new auditing procedures on banks and oil prices rose overnight. The Shanghai Composite Index soared 4.5 percent, its second-highest daily percentage gain of 2009, after falling 4.3 percent yesterday.
The Hang Seng index was up 1.9 percent. The China Enterprises Index, representing top Hong Kong-listed mainland stocks, was up 2.3 percent.
The Hang Sang Property Index gained 3.41 percent while mainland-listed property shares advanced 3.46 percent on average.
The 21st Century Herald today reported that the National Audit Office will audit banks on their implementation of macro-economic policies, specifically the destination of loans. The anticipation of new controls to tighten liquidity has depressed Chinese markets for the last two weeks, with the announcement of this measure potentially signaling the end of uncertainty over government policy.
There were also positive signs of government support, as the China Securities Regulatory Commission approved three ETFs for the mainland markets.
Rises were also driven by rise in oil price, after the U.S. Department of Energy released data overnight showing that oil inventories plunged by 8.4 million barrels last week.
Energy shares led gains, with coal shares surging over 6 percent on average. Four companies rose to the 10 percent trading cap, including: Anhui Hengyuan Coal Industry (SH:600971) and Guizhou Panjiang Refined Coal (SH:600395). Shenhua (SH:601088, HK:1088) China's largest coal producer rose 7.94 percent in Shanghai and 2.9 percent in Hong Kong. Yanzhou coal mining (HK:1171) rose 3.3 percent.
China Yangtze Power (SH:600900) rose 5 percent. PetroChina (SH:601857, HK:0857) closed 5.31 percent higher.
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